SPANISH BROADCASTING SYSTEM INC (Form: 10-Q, Received: 08/13/2010 17:01:10)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2010


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 000-27823

Spanish Broadcasting System, Inc.

(Exact name of registrant as specified in its charter)


Delaware (State or other jurisdiction of incorporation or organization)		13-3827791 (I.R.S. Employer Identification No.)

2601 South Bayshore Drive, PH 2
Coconut Grove, Florida 33133
(Address of principal executive offices) (Zip Code)

(305) 441-6901
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer o		Accelerated filer o		Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company þ

Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

As of August 12, 2010, 41,596,513 shares of Class A common stock, par value $0.0001 per share, 23,403,500 shares of Class B common stock, par value $0.0001 per share and 380,000 shares of Series C convertible preferred stock, $0.01 par value per share, which are convertible into 7,600,000 shares of Class A common stock, were outstanding.

SPANISH BROADCASTING SYSTEM, INC.
INDEX


	Page
PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements — Unaudited		4

Unaudited Condensed Consolidated Balance Sheets as of June 30, 2010 and December 31, 2009		4

Unaudited Condensed Consolidated Statements of Operations for the Three- and Six-Months Ended June 30, 2010 and 2009		5

Unaudited Condensed Consolidated Statement of Changes in Stockholders’ Deficit and Comprehensive Income for the Six-Months Ended June 30, 2010		6

Unaudited Condensed Consolidated Statements of Cash Flows for the Six-Months Ended June 30, 2010 and 2009		7

Notes to Unaudited Condensed Consolidated Financial Statements		8

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		14

ITEM 4. Controls and Procedures		22

PART II. OTHER INFORMATION

ITEM 1. Legal Proceedings		22

ITEM 1A. Risk Factors		22

ITEM 6. Exhibits		23

Exhibit 10.1
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains both historical and forward-looking statements. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). These forward-looking statements are not based on historical facts, but rather reflect our current expectations concerning future results and events. These forward-looking statements generally can be identified by the use of statements that include phrases such as “believe”, “expect”, “anticipate”, “intend”, “estimate”, “plan”, “project”, “foresee”, “likely”, “will” or other words or phrases with similar meanings. Similarly, statements that describe our objectives, plans or goals are, or may be, forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be different from any future results, performance and anticipated achievements expressed or implied by these statements. We do not intend to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations or projections. These risks and uncertainties include, but are not limited to those described in this report, in Part II, “Item 1A. Risk Factors” and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2009, and those described from time to time in our future reports filed with the Securities and Exchange Commission (the SEC).

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements — Unaudited

SPANISH BROADCASTING SYSTEM, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Balance Sheets


	June 30,			December 31,
	2010			2009
	(In thousands, except share data)
Assets
Current assets:
Cash and cash equivalents	$	44,648			53,580
Receivables, net of allowance for doubtful accounts of $839 in 2010 and $1,247 in 2009		25,824			24,800
Prepaid expenses and other current assets		3,301			3,439

Total current assets		73,773			81,819
Property and equipment, net of accumulated depreciation of $52,540 in 2010 and $49,560 in 2009		43,162			45,365
FCC broadcasting licenses		312,623			312,623
Goodwill		32,806			32,806
Other intangible assets, net of accumulated amortization of $231 in 2010 and $214 in 2009		1,202			1,220
Deferred financing costs, net of accumulated amortization of $5,559 in 2010 and $5,028 in 2009		2,043			2,574
Other assets		2,322			2,386

Total assets	$	467,931			478,793


Liabilities and Stockholders’ Deficit

Current liabilities:
Accounts payable and accrued expenses	$	18,569			18,211
Accrued interest		4,066			5,608
Unearned revenue		471			570
Other liabilities		266			602
Derivative instruments		—			5,863
Senior credit facility revolver due 2010		—			15,000
Current portion of the senior credit facility term loan due 2012		3,250			3,250
Current portion of other long-term debt		441			447
Series B cumulative exchangeable redeemable preferred stock dividends payable		9,514			7,032

Total current liabilities		36,577			56,583
Other liabilities, less current portion		2,249			405
Derivative instruments		838			612
Senior credit facility term loan due 2012, less current portion		304,687			306,313
Other long-term debt, less current portion		6,388			6,605
Deferred income taxes		74,895			71,408

Total liabilities		425,634			441,926

Commitments and contingencies (note 7)
Cumulative exchangeable redeemable preferred stock 10 ³ / 4 % Series B cumulative exchangeable redeemable preferred stock, $0.01 par value, liquidation value $1,000 per share. Authorized 280,000 shares; 92,349 shares issued and outstanding at June 30, 2010 and December 31, 2009, respectively		92,349			92,349

Stockholders’ deficit:
Series C convertible preferred stock, $0.01 par value and liquidation value. Authorized 600,000 shares; 380,000 shares issued and outstanding at June 30, 2010 and December 31, 2009, respectively		4			4
Class A common stock, $0.0001 par value. Authorized 100,000,000 shares; 41,596,513 and 41,542,513 shares issued and outstanding at June 30, 2010 and December 31, 2009, respectively		4			4
Class B common stock, $0.0001 par value. Authorized 50,000,000 shares; 23,403,500 shares issued and outstanding at June 30, 2010 and December 31, 2009, respectively		2			2
Additional paid-in capital		525,142			525,026
Accumulated other comprehensive loss		(838	)		(2,513	)
Accumulated deficit		(574,366	)		(578,005	)

Total stockholders’ deficit		(50,052	)		(55,482	)

Total liabilities and stockholders’ deficit	$	467,931			478,793

See accompanying notes to the unaudited condensed consolidated financial statements.

SPANISH BROADCASTING SYSTEM, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Operations


	Three-Months Ended						Six-Months Ended
	June 30,						June 30,
	2010			2009			2010			2009
	(In thousands, except per share data)

Net revenue	$	35,837			37,052			66,683			64,846
Operating expenses:
Engineering and programming		9,991			11,234			19,865			22,239
Selling, general and administrative		10,832			12,463			23,621			23,825
Corporate expenses		2,254			2,312			4,475			5,173
Depreciation and amortization		1,446			1,570			3,002			3,163

Total operating expenses		24,523			27,579			50,963			54,400
Loss (gain) on the disposal of assets, net		8			(26	)		8			(15	)
Impairment of assets and restructuring costs		—			70			—			10,686

Operating income (loss)		11,306			9,429			15,712			(225	)
Other (expense) income:
Interest expense, net		(3,123	)		(6,701	)		(9,426	)		(13,118	)
Change in fair value of derivative instrument		3,016			(366	)		5,863			2,490
Other, net		—			1			—			1

Income (loss) before income taxes		11,199			2,363			12,149			(10,852	)
Income tax expense (benefit)		1,768			1,904			3,546			(365	)

Net income (loss)		9,431			459			8,603			(10,487	)
Dividends on Series B preferred stock		(2,482	)		(2,482	)		(4,964	)		(4,964	)

Net income (loss) applicable to common stockholders	$	6,949			(2,023	)		3,639			(15,451	)

Basic and diluted net income (loss) per common share	$	0.10			(0.03	)		0.05			(0.21	)


Weighted average common shares outstanding:
Basic		72,600			72,502			72,600			72,502

Diluted		72,870			72,502			72,824			72,502

See accompanying notes to the unaudited condensed consolidated financial statements.

SPANISH BROADCASTING SYSTEM, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statement of Changes in Stockholders’ Deficit
and Comprehensive Income for the Six-Months Ended June 30, 2010


	Class C				Class A				Class B						Accumulated
	preferred stock				common stock				common stock				Additional		other						Total
	Number of		Par		Number of		Par		Number of		Par		paid-in		comprehensive			Accumulated			stockholders’
	shares		value		shares		value		shares		value		capital		loss			deficit			deficit
	(In thousands, except share data)
Balance at December 31, 2009		380,000	$	4		41,542,513	$	4		23,403,500	$	2	$	525,026	$	(2,513	)	$	(578,005	)	$	(55,482	)
Issuance of Class A common stock from vesting of restricted stock		—		—		54,000		—		—		—		—		—			—			—
Stock-based compensation		—		—		—		—		—		—		116		—			—			116
Series B preferred stock dividends		—		—		—		—		—		—		—		—			(4,964	)		(4,964	)
Comprehensive income:
Net income		—		—		—		—		—		—		—		—			8,603			8,603
Amounts reclassified to earnings during the period		—		—		—		—		—		—		—		1,901			—			1,901
Unrealized loss on derivative instruments		—		—		—		—		—		—		—		(226	)		—			(226	)

Comprehensive income																						10,278

Balance at June 30, 2010		380,000	$	4		41,596,513	$	4		23,403,500	$	2	$	525,142	$	(838	)	$	(574,366	)	$	(50,052	)

See accompanying notes to the unaudited condensed consolidated financial statements.

SPANISH BROADCASTING SYSTEM, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Cash Flows


	Six-Months Ended
	June 30,
	2010			2009
	(In thousands)
Cash flows from operating activities:
Net income (loss)	$	8,603			(10,487	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Loss (gain) loss on the sale of assets		8			(15	)
Impairment of assets		—			10,123
Stock-based compensation		116			132
Depreciation and amortization		3,002			3,163
Net barter income		(216	)		(248	)
Provision for trade doubtful accounts		202			(115	)
Amortization of deferred financing costs		531			537
Deferred income taxes		3,487			(684	)
Unearned revenue		99			135
Change in fair value of derivative instrument		(3,962	)		201
Amortization of other liabilities		—			(33	)
Changes in operating assets and liabilities:
Trade receivables		(1,208	)		1,700
Prepaid expenses and other current assets		138			528
Other assets		64			627
Accounts payable and accrued expenses		376			1,250
Accrued interest		(1,542	)		4,532
Other liabilities		1,508			—


Net cash provided by operating activities		11,206			11,346


Cash flows from investing activities:
Purchases of property and equipment		(807	)		(547	)
Proceeds from the sale of property and equipment and insurance recoveries		—			212


Net cash used in investing activities		(807	)		(335	)


Cash flows from financing activities:
Payment of senior credit facility revolver due 2010		(15,000	)		—
Payment of senior secured credit facility term loan 2012		(1,626	)		(1,626	)
Payment of Series B preferred stock cash dividends		(2,482	)		(4,964	)
Payments of other long-term debt		(223	)		(217	)


Net cash used in financing activities		(19,331	)		(6,807	)


Net (decrease) increase in cash and cash equivalents		(8,932	)		4,204

Cash and cash equivalents at beginning of period		53,580			32,852


Cash and cash equivalents at end of period	$	44,648			37,056


Supplemental cash flows information:
Interest paid	$	6,539			5,362

Income taxes paid, net	$	8			22


Noncash investing and financing activities:
Accrual of Series B preferred stock cash dividends not declared	$	2,482			—

Unrealized (loss) gain on derivative instruments	$	(226	)		359

See accompanying notes to the unaudited condensed consolidated financial statements.

SPANISH BROADCASTING SYSTEM, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

The unaudited condensed consolidated financial statements include the accounts of Spanish Broadcasting System, Inc. and its subsidiaries (the Company, we, us, our or SBS). All intercompany balances and transactions have been eliminated in consolidation. The accompanying unaudited condensed consolidated financial statements as of June 30, 2010 and December 31, 2009 and for the three- and six-month periods ended June 30, 2010 and 2009 have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. They do not include all information and notes required by U.S. GAAP for complete financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with our consolidated financial statements as of, and for the fiscal year ended December 31, 2009, included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2009. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, which are all of a normal and recurring nature, necessary for a fair presentation of the results of the interim periods. Additionally, we evaluated subsequent events after the balance sheet date of June 30, 2010 through the financial statements issuance date. The results of operations for the three- and six-month period ended June 30, 2010 are not necessarily indicative of the results for a full year.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions about future events that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities at the date of the financial statements. Significant items subject to such estimates and assumptions include: the useful lives of fixed assets, allowance for doubtful accounts, the valuation of derivatives, deferred tax assets, fixed assets, intangible assets, stock-based compensation, contingencies and litigation. These estimates and assumptions are based on management’s best judgments. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. Management adjusts such estimates and assumptions as facts and circumstances dictate. Illiquid credit markets, volatile equity markets and reductions in advertising spending have combined to increase the uncertainty inherent in such estimates and assumptions. Actual results could differ from these estimates. Certain prior year amounts have been reclassified to conform with the current year presentation.

2. Stockholders’ Deficit

(a) Series C Convertible Preferred Stock

On December 23, 2004, in connection with the closing of the merger agreement, dated October 5, 2004, with CBS Radio (formerly known as Infinity Media Corporation, CBS Radio), a division of CBS Corporation, Infinity Broadcasting Corporation of San Francisco (Infinity SF) and SBS Bay Area, LLC, a wholly-owned subsidiary of SBS (SBS Bay Area), we issued to CBS Radio (i) an aggregate of 380,000 shares of Series C convertible preferred stock, $0.01 par value per share (the Series C preferred stock), each of which is convertible at the option of the holder into twenty fully paid and non-assessable shares of our Class A common stock, $0.0001 par value per share (the Class A common stock). The shares of Series C preferred stock issued at the closing of the merger are convertible into 7,600,000 shares of our Class A common stock, subject to adjustment.

In connection with the closing of the merger transaction, we also entered into a registration rights agreement with CBS Radio, pursuant to which CBS Radio may instruct us to file up to three registration statements, on a best efforts basis, with the SEC providing for the registration for resale of the Class A common stock issuable upon conversion of the Series C preferred stock.

We are required to pay holders of Series C preferred stock dividends on parity with our Class A common stock and Class B common stock, $0.0001 par value per share (the Class B common stock), and each other class or series of our capital stock, if created, after December 23, 2004.

(b) Class A and B Common Stock

The rights of the holders of shares of Class A common stock and Class B common stock are identical, except for voting rights and conversion provisions. The Class A common stock is entitled to one vote per share and the Class B common stock is entitled to ten votes per share. The Class B common stock is convertible to Class A common stock on a share-for-share basis at the option of the holder at any time, or automatically upon the transfer to a person or entity which is not a permitted transferee. Holders of each class of common stock are entitled to receive dividends and, upon liquidation or dissolution, are entitled to receive all assets available for distribution to stockholders. The holders of each class have no preemptive or other subscription rights and there are no redemption or sinking fund provisions with respect to such shares. Each class of common stock is subordinate to our 10 ³ / 4 % Series B cumulative exchangeable redeemable preferred stock, par value $0.01 per share and liquidation preference of $1,000 per share (the Series B preferred stock) and on parity with the Series C preferred stock with respect to dividend rights and rights upon liquidation, winding up and dissolution of SBS.

(c) Share-Based Compensation Plans

2006 Omnibus Equity Compensation Plan

In July 2006, we adopted an omnibus equity compensation plan (the Omnibus Plan) in which grants can be made to participants in any of the following forms: (i) incentive stock options, (ii) non-qualified stock options, (iii) stock appreciation rights, (iv) stock units, (v) stock awards, (vi) dividend equivalents, and (vii) other stock-based awards. The Omnibus Plan authorizes up to 3,500,000 shares of our Class A common stock for issuance, subject to adjustment in certain circumstances. The Omnibus Plan provides that the maximum aggregate number of shares of Class A common stock that may be granted, other than dividend equivalents, to any individual during any calendar year is 1,000,000 shares, subject to adjustments. In addition, the maximum aggregate number of shares of Class A common stock with respect to grants of stock units, stock awards and other stock-based awards that may be granted to any individual during a calendar year is also 1,000,000 shares, subject to adjustments.

1999 Stock Option Plans

In September 1999, we adopted an employee incentive stock option plan (the 1999 ISO Plan) and a non-employee director stock option plan (the 1999 NQ Plan, and together with the 1999 ISO Plan, the 1999 Stock Option Plans). Options granted under the 1999 ISO Plan vest according to the terms determined by the compensation committee of our board of directors, and have a contractual life of up to ten years from the date of grant. Options granted under the 1999 NQ Plan vest 20% upon grant and 20% each year for the first four years from the date of grant. All options granted under the 1999 ISO Plan and the 1999 NQ Plan vest immediately upon a change in control of SBS, as defined therein. A total of 3,000,000 shares and 300,000 shares of Class A common stock were reserved for issuance under the 1999 ISO Plan and the 1999 NQ Plan, respectively. In September 2009, our 1999 Stock Option Plans expired; therefore, no more options can be granted under these plans.

Stock Options and Nonvested Shares Activity

Stock options have only been granted to employees and directors. Our stock options have various vesting schedules and are subject to the employees and directors continuing their service to SBS. We recognize compensation expense based on the estimated grant date fair value using the Black-Scholes option pricing model and recognize the compensation expense using a straight-line amortization method. When estimating forfeitures, we consider voluntary termination behaviors, as well as trends of actual option forfeitures. Ultimately, our stock-based compensation expense is based on awards that vest. Our stock-based compensation has been reduced for estimated forfeitures.

A summary of the status of our stock options, as of December 31, 2009 and June 30, 2010, and changes during the six-months ended June 30, 2010, is presented below (in thousands, except per share data):


								Weighted
				Weighted				Average
				Average		Aggregate		Remaining
				Exercise		Intrinsic		Contractual
	Shares			Price		Value		Life (Years)
Outstanding at December 31, 2009		2,057		$	6.41
Granted		50			1.79
Exercised		—			—
Forfeited		(25	)		2.55

Outstanding at June 30, 2010		2,082		$	6.35	$	221		4.3


Exercisable at June 30, 2010		1,980		$	6.60	$	193		4.1

During the six-months ended June 30, 2010 and 2009, no stock options were exercised; therefore, no cash payments were received. In addition, we did not recognize a tax benefit on our stock-based compensation expense due to our valuation allowance on substantially all of our deferred tax assets.

The following table summarizes information about stock options outstanding and exercisable at June 30, 2010 (in thousands, except per share data):


							Weighted
	Outstanding						Average		Exercisable
					Weighted		Remaining				Weighted
					Average		Contractual				Average
			Unvested		Exercise		Life		Number		Exercise
Range of Exercise Prices	Vested Options		Options		Price		(Years)		Exercisable		Price
$0.20 – 4.99		623		102	$	2.19		7.0		623	$	2.32
5.00 – 9.99		1,159		—		8.19		2.7		1,159		8.19
10.00 – 11.78		198		—		10.79		4.3		198		10.79

		1,980		102	$	6.35		4.3		1,980	$	6.60

Nonvested shares (restricted stock or restricted stock units) are awarded to employees under our Omnibus Plan. In general, nonvested shares will vest over three to five years and are subject to the employees continuing their service to us. The cost of nonvested shares is determined using the fair value of our common stock on the date of grant. The compensation expense is recognized over the vesting period.

A summary of the status of our nonvested shares, as of December 31, 2009 and June 30, 2010, and changes during the six-months ended June 30, 2010, is presented below (in thousands, except per share data):


				Weighted
				Average Grant-
				Date Fair Value
	Shares			(per Share)
Nonvested at December 31, 2009		127		$	1.73
Awarded		—			—
Vested		(54	)		2.78
Forfeited		—			—

Nonvested at June 30, 2010		73		$	0.96

3. Basic and Diluted Net Income (Loss) Per Common Share

Basic net income (loss) per common share was computed by dividing net income (loss) applicable to common stockholders by the weighted average number of shares of common stock and convertible preferred stock outstanding for each period presented, using the “if converted” method. Diluted net income (loss) per common share is computed by giving effect to common stock equivalents as if they were outstanding for the entire period.

For the three- and six-month periods ended June 30, 2010, potential common shares were dilutive due to net income applicable to common stockholders. For the three- and six-month periods ended June 30, 2009, potential common shares were anti-dilutive due to a net loss applicable to common stockholders.

The following is a reconciliation of the shares used in the computation of basic and diluted net income (loss) per share for the three- and six-month periods ended June 30, 2010 and 2009 (in thousands):


	Three-Months Ended				Six-Months ended
	June 30,				June 30,
	2010		2009		2010		2009

Basic weighted average shares outstanding		72,600		72,502		72,600		72,502
Effect of dilutive equity instruments		270		—		224		—

Dilutive weighted average shares outstanding		72,870		72,502		72,824		72,502


Options to purchase shares of common stock and other stock-based awards outstanding which are not included in the calculation of diluted net income (loss) per share because their impact is anti-dilutive		1,757		2,712		1,789		2,712

4. Operating Segments

We have two reportable segments: radio and television. The following summary table presents separate financial data for each of our operating segments (in thousands):


	Three-Months Ended						Six-Months Ended
	June 30,						June 30,
	2010			2009			2010			2009
	(In thousands)						(In thousands)
Net revenue:
Radio	$	31,823			33,189			58,903			57,365
Television		4,014			3,863			7,780			7,481

Consolidated	$	35,837			37,052			66,683			64,846


Engineering and programming expenses:
Radio	$	5,684			7,104			11,474			14,495
Television		4,307			4,130			8,391			7,744

Consolidated	$	9,991			11,234			19,865			22,239


Selling, general and administrative expenses:
Radio	$	9,084			10,303			19,955			19,455
Television		1,748			2,160			3,666			4,370

Consolidated	$	10,832			12,463			23,621			23,825


Corporate expenses:	$	2,254			2,312			4,475			5,173

Depreciation and amortization:
Radio	$	653			780			1,386			1,593
Television		564			552			1,126			1,090
Corporate		229			238			490			480

Consolidated	$	1,446			1,570			3,002			3,163


Loss (gain) on the disposal of assets, net:
Radio	$	—			(12	)		—			(20	)
Television		8			—			8			19
Corporate		—			(14	)		—			(14	)

Consolidated	$	8			(26	)		8			(15	)


Impairment of assets and restructuring costs:
Radio	$	—			66			—			10,614
Television		—			—			—			24
Corporate		—			4			—			48

Consolidated	$	—			70			—			10,686


Operating (loss) income:
Radio	$	16,402			14,948			26,088			11,228
Television		(2,613	)		(2,979	)		(5,411	)		(5,766	)
Corporate		(2,483	)		(2,540	)		(4,965	)		(5,687	)

Consolidated	$	11,306			9,429			15,712			(225	)


Capital expenditures:
Radio	$	342			216			401			394
Television		15			26			310			124
Corporate		65			16			96			29

Consolidated	$	422			258			807			547


	June 30,		December 31,
Total Assets:	2010		2009
	(In thousands)
Radio	$	415,891		425,565
Television		45,698		45,811
Corporate		6,342		7,417

Consolidated	$	467,931		478,793

5. Comprehensive Income (Loss)

Our total comprehensive income (loss), comprised of net income (loss), amounts reclassified to earnings during the period, and unrealized (loss) gain on derivative instruments, for the three- and six-months ended June 30, 2010 and 2009, respectively, was as follows (in thousands):


	Three-Months Ended						Six-Months ended
	June 30,						June 30,
	2010			2009			2010			2009
Net income (loss)	$	9,431			459		$	8,603			(10,487	)
Other comprehensive income (loss):
Amounts reclassified to earnings during the period		873			1,449			1,901			2,691
Unrealized (loss) gain on derivative instruments		(142	)		(29	)		(226	)		359

Total comprehensive income (loss)	$	10,162			1,879		$	10,278			(7,437	)

6. Income Taxes

We have determined that due to a number of reasons, we are no longer able to estimate our annual effective tax rate during our interim periods, which would be applied to our pre-tax ordinary income. We are calculating our effective income tax rate using a year-to-date income tax calculation. Our income tax expense differs from the statutory federal tax rate of 35% and related statutory state tax rates, primarily as a result of the reversal of our deferred tax liabilities related to the tax amortization of our FCC broadcasting licenses, which could no longer be assured over our net operating loss carry forward period. Therefore, our effective tax rate is impacted by the establishment of a valuation allowance on substantially all of our deferred tax assets.

We file federal, state and local income tax returns in the United States and Puerto Rico. The tax years that remain subject to assessment of additional liabilities by the United States federal, state, and local tax authorities are 2006 through 2009. The tax years that remain subject to assessment of additional liabilities by the Puerto Rico tax authority are 2004 through 2009.

Based on our evaluation, we have concluded that there are no significant uncertain tax positions requiring recognition in our consolidated financial statements as of June 30, 2010 and December 31, 2009.

7. Litigation

We are subject to certain legal proceedings and claims that have arisen in the ordinary course of business and have not been fully adjudicated. In our opinion, we do not have a potential liability related to any current legal proceedings and claims that would individually or in the aggregate have a material adverse effect on our financial condition or operating results. However, the results of legal proceedings cannot be predicted with certainty. Should we fail to prevail in any of these legal matters or should all of these legal matters be resolved against us in the same reporting period, the operating results of a particular reporting period could be materially adversely affected.

8. Derivative and Hedging Activities

At June 30, 2010, derivative financial instruments are comprised of the following (in thousands):


	Fixed
	interest			Expiration	Notional		Fair
Agreement	rate			date	amounts		value
Interest rate swap		5.98	%	June 2010	$	—	$	—
Interest rate swap		6.31	%	January 2017		6,605		838

					$	6,605	$	838

In June 2005, we entered into a five-year interest rate swap agreement for the original notional principal amount of $324.2 million whereby we paid a fixed interest rate of 5.98% as compared to interest at a floating rate equal to three-month LIBOR plus 175 basis points. The interest rate swap amortization schedule was identical to the First Lien Credit Facility amortization schedule during June 2005 to June 2010.

In September and October 2008, the counterparty to this interest rate swap, Lehman Brothers Special Financing Inc., and its parent and credit support provider, Lehman Brothers Holdings Inc., each filed for bankruptcy. Based on these bankruptcy filings, this cash flow hedge was deemed ineffective and no longer qualified for hedge accounting. Therefore, the change in fair value from September 2008 to June 2010 was recorded in earnings as a “Change in fair value of derivative instrument.” For the three-month periods ended June 30, 2010 and 2009, the change in the fair value of derivative instrument totaled $3.0 million and $(0.4) million, respectively. For the six-month periods ended June 30, 2010 and 2009, the change in the fair value of derivative instrument totaled $5.9 million and $2.5 million, respectively. Additionally, the Accumulated Other Comprehensive Loss associated with this hedge as of September 2008 was $7.8 million and was reclassified into earnings (interest expense) monthly until June 2010. For the six-month periods ended June 30, 2010 and 2009, $1.9 million and $2.7 million were reclassified and recorded as interest expense, respectively.

As a result of the Lehman bankruptcy filings, a dispute arose with respect to the outstanding payments under the swap agreement. On June 17, 2010, the parties successfully resolved the dispute under mediation and entered into a confidential settlement and release agreement. The financial impact of the settlement is reflected in our unaudited condensed consolidated balance sheet and statement of operations.

On January 4, 2007, we entered into a ten-year interest rate swap agreement for the original notional principal amount of $7.7 million whereby we will pay a fixed interest rate of 6.31%, as compared to interest at a floating rate equal to one-month LIBOR plus 125 basis points. The interest rate swap amortization schedule is identical to the promissory note amortization schedule, which has an effective date of January 4, 2007, monthly notional reductions and an expiration date of January 4, 2017.

9. Fair Value Measurement Disclosures

Fair Value of Financial Instruments

Cash and cash equivalents, receivables, as well as accounts payable, and other current liabilities, as reflected in the unaudited condensed consolidated balance sheets, approximate fair value because of the short-term maturity of these instruments. The estimated fair value of our other long-term debt instruments, approximate their carrying amounts as the interest rates approximate our current borrowing rate for similar debt instruments of comparable maturity, or have variable interest rates.

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

The estimated fair values of our financial instruments are as follows (in millions):


	June 30, 2010				December 31, 2009
	Gross				Gross
	Carrying				Carrying
Description	Amount		Fair Value		Amount		Fair Value
Senior credit facility term loan	$	307.9		266.4		309.6		255.9
10 ³ / ₄ % Series B cumulative exchangeable redeemable preferred stock		92.3		61.4		92.3		57.9

Promissory note payable, included in other long-term debt		6.6		6.5		6.8		6.5

The fair value estimates of these financial instruments were based upon either: (a) market quotes from a major financial institution taking into consideration the most recent market activity, or (b) a discounted cash flow analysis taking into consideration current rates.

Fair Value of Derivative Instruments

The following table represents required quantitative disclosures regarding fair values of our derivative instruments (in thousands).

Fair value measurements at June 30, 2010

Liabilities

June 30, 2010

Quoted prices in

Significant

carrying value and

active markets

other

Significant

Balance sheet

for identical

observable

unobservable

location of derivative

instruments

inputs

Description

instruments

(Level 1)

(Level 2)

(Level 3)

Derivative designated as a cash flow hedging instrument:

Interest rate swap

838

—

838

—

Fair value measurements at December 31, 2009

Liabilities

December 31, 2009

Quoted prices in

Significant

carrying value and

active markets

other

Significant

balance sheet

for identical

observable

unobservable

location of derivative

instruments

inputs

Description

instruments

(Level 1)

(Level 2)

(Level 3)

Derivative designated as a cash flow hedging instrument:

Interest rate swap

612

—

612

—

Derivative no longer designated as a cash flow hedging instrument:

Interest rate swap

5,863

—

5,863

—

Total

6,475

—

6,475

—

The interest rate swap fair value is derived from the present value of the difference in cash flows based on the forward-looking LIBOR yield curve rates, as compared to our fixed rate applied to the hedged amount through the term of the agreement, less adjustments for credit risk.


	Three-Months Ended June 30,						Six-Months Ended June 30,
Interest rate swaps	2010			2009			2010			2009

(Loss) gain recognized in other comprehensive loss (effective portion)	$	(142	)		(29	)	$	(226	)		359

Loss reclassified from accumulated other comprehensive loss into interest expense		873			1,449			1,901			2,691
Gain (loss) recognized in change in fair value of derivative instrument		3,016			(366	)		5,863			2,490

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

We own and/or operate 21 radio stations in markets that reach approximately 48% of the Hispanic population in the U.S., including Puerto Rico. In addition, we own and operate two television stations and have various affiliation, distribution and/or programming agreements, which allow us to reach approximately 6.5 million households throughout the U.S., including Puerto Rico.

The success of each of our stations depends significantly upon its audience ratings and its share of the overall advertising revenue within its market. The broadcasting industry is a highly competitive business, but some barriers to entry do exist. Each of our stations competes with both Spanish-language and English-language stations in its market, as well as with other advertising media, such as newspapers, cable television, the Internet, magazines, outdoor advertising, satellite radio and television, transit advertising and direct mail marketing. Factors which are material to our competitive position include management experience, our stations’ rank in their markets, signal strength and frequency, and audience demographics, including the nature of the Spanish-language market targeted by a particular station.

Our primary source of revenue is the sale of advertising time on our stations to local and national advertisers. Revenue is affected primarily by the advertising rates that our stations are able to charge, as well as the overall demand for advertising time in each respective market. Seasonal net broadcasting revenue fluctuations are common in the broadcasting industry and are primarily due to fluctuations in advertising demand from local and national advertisers. Typically for the broadcasting industry, the first calendar quarter generally produces the lowest revenue. Our most significant operating expenses are usually compensation expenses, programming expenses, professional fees, and advertising and promotional expenses. Senior management strives to control these expenses, as well as other expenses, by working closely with local station management and others, including vendors.

Our radio stations are located in six of the top-ten Hispanic markets of Los Angeles, New York, Puerto Rico, Chicago, Miami and San Francisco. Los Angeles and New York have the largest and second largest Hispanic populations, and are also the largest and second largest radio markets in the United States in terms of advertising revenue, respectively. We format the programming of each of our radio stations to capture a substantial share of the U.S. Hispanic audience in their respective markets. The U.S. Hispanic population is diverse, consisting of numerous identifiable groups from many different countries of origin and each with its own musical and cultural heritage. The music, culture, customs and Spanish dialects vary from one radio market to another. We strive to maintain familiarity with the musical tastes and preferences of each of the various Hispanic ethnic groups and customize our programming to match the local preferences of our target demographic audience in each market we serve. Our radio revenue is generated primarily from the sale of local and national advertising.

Our television stations and related affiliates operate under the “MegaTV” brand. We have created a unique television format which focuses on entertainment, current events and variety with high-quality production. Our programming is formatted to capture shares of the U.S. Hispanic audience by focusing on our core strengths as an “entertainment” company, thus offering a new alternative compared to the traditional Latino channels. MegaTV’s programming is based on a strategy designed to showcase a combination of programs, ranging from televised radio-branded shows to general entertainment programs, such as music, celebrity, debate, interviews and personality based shows. As part of our strategy, we have incorporated certain of our on-air personalities into our programming, as well as including interactive elements to complement our Internet websites. We develop and produce more than 70% of our programming and obtain other content from Spanish-language production partners. Our television revenue is generated primarily from the sale of local advertising and paid programming.

As part of our operating business, we also operate LaMusica.com, Mega.tv, and our radio station websites which are bilingual (Spanish — English) websites providing content related to Latin music, entertainment, news and culture. LaMusica.com and our network of station websites generate revenue primarily from advertising and sponsorship. In addition, the majority of our station websites simultaneously stream our stations’ content, which has broadened the audience reach of our radio stations. We also occasionally produce live concerts and events throughout the United States, including Puerto Rico.

Comparison Analysis of the Operating Results for the Three-Months Ended June 30, 2010 and 2009

The following summary table presents financial data for each of our operating segments (in thousands):


	Three-Months Ended
	June 30,
	2010			2009
	(In thousands)
Net revenue:
Radio	$	31,823			33,189
Television		4,014			3,863

Consolidated	$	35,837			37,052


Engineering and programming expenses:
Radio	$	5,684			7,104
Television		4,307			4,130

Consolidated	$	9,991			11,234


Selling, general and administrative expenses:
Radio	$	9,084			10,303
Television		1,748			2,160

Consolidated	$	10,832			12,463


Corporate expenses:	$	2,254			2,312

Depreciation and amortization:
Radio	$	653			780
Television		564			552
Corporate		229			238

Consolidated	$	1,446			1,570


Loss (gain) on the disposal of assets, net:
Radio	$	—			(12	)
Television		8			—
Corporate		—			(14	)

Consolidated	$	8			(26	)


Impairment of assets and restructuring costs:
Radio	$	—			66
Television		—			—
Corporate		—			4

Consolidated	$	—			70


Operating (loss) income:
Radio	$	16,402			14,948
Television		(2,613	)		(2,979	)
Corporate		(2,483	)		(2,540	)

Consolidated	$	11,306			9,429

The following summary table presents a comparison of our results of operations for the three-months ended June 30, 2010 and 2009. Various fluctuations in the table are discussed below. This section should be read in conjunction with our unaudited condensed consolidated financial statements and notes.


	Three-Months Ended
	June 30,
	2010			2009
	(In thousands)
Net revenue	$	35,837			37,052
Engineering and programming expenses		9,991			11,234
Selling, general and administrative expenses		10,832			12,463
Corporate expenses		2,254			2,312
Depreciation and amortization		1,446			1,570
Loss (gain) on disposal of assets, net of disposal costs		8			(26	)
Impairment of assets and restructuring costs		—			70

Operating income	$	11,306			9,429
Interest expense, net		(3,123	)		(6,701	)
Change in fair value of derivative instrument		3,016			(366	)
Other income, net		—			1
Income tax expense		1,768			1,904

Net income	$	9,431			459

Net Revenue

The decrease in our consolidated net revenue of $1.2 million or 3% was due to the decrease in our radio segment net revenue. Our radio segment net revenue decreased $1.4 million or 4%, primarily due to national sales. The decrease in national sales occurred in all of our markets, with the exception of our San Francisco and Puerto Rico markets. Our television segment net revenue increased $0.2 million or 4%, primarily due to an increase in local spot sales and integrated sales, offset by a decrease in paid programming.

Engineering and Programming Expenses

The decrease in our consolidated engineering and programming expenses of $1.2 million or 11% was due to the decrease in our radio segment expenses. Our radio segment expenses decreased $1.4 million or 20%, primarily related to decreases in compensation and benefits for technical and programming personnel due to headcount reductions and music license fees. Our television segment expenses increased $0.2 million or 4%, primarily due to an increase in broadcasting rights fees for our new Puerto Rico, New York and Chicago outlets, offset by a decrease in acquired and original produced programming content.

Selling, General and Administrative Expenses

The decrease in our consolidated selling, general and administrative expenses of $1.6 million or 13% was due to decreases in both our radio and television segment expenses. Our radio segment expenses decreased $1.2 million or 12%, primarily due to decreases in rating services fees, facilities expenses and compensation and benefits for our selling, general and administrative personnel resulting from headcount reductions. Our television segment expenses decreased $0.4 million or 19%, primarily due to a decrease in professional fees, facilities expense and compensation and benefits for our selling, general and administrative personnel due to headcount reductions.

Corporate Expenses

The decrease in corporate expenses was primarily a result of decreases in compensation and benefits for our corporate personnel.

Operating Income

The increase in operating income was mainly due to the decrease in our operating expenses, offset by the decrease in our net revenue.

Interest Expense, Net

In September and October 2008, the counterparty to an interest rate swap, Lehman Brothers Special Financing Inc., and its parent and credit support provider, Lehman Brothers Holdings Inc., each filed for bankruptcy. Based on these bankruptcy filings, this cash flow hedge was deemed ineffective. As a result of the Lehman bankruptcy filings, a dispute arose with respect to the outstanding payments under the swap agreement. On June 17, 2010, the parties successfully resolved the dispute under mediation and entered into a confidential settlement and release agreement, resulting in a decrease in interest expense.

Change in Fair Value of Derivative Instrument

In September and October 2008, the counterparty to an interest rate swap, Lehman Brothers Special Financing Inc., and its parent and credit support provider, Lehman Brothers Holdings Inc., each filed for bankruptcy. Based on these bankruptcy filings, this cash flow hedge was deemed ineffective and no longer qualified for hedge accounting. Therefore, the change in fair value from September 2008 to June 2010 was recorded in earnings as a “Change in fair value of derivative instrument.” For the three-month periods ended June 30, 2010 and 2009, the change in the fair value of derivative instrument totaled $3.0 million and $(0.4) million, respectively.

Income Taxes

The income tax expense of $1.8 million arose primarily from the income tax expense resulting from the tax amortization of our FCC broadcasting licenses.

Net Income

The increase in net income was primarily due to the decreases in operating expenses, interest expense, and the increase in change in fair value of derivative instrument.

Comparison Analysis of the Operating Results for the Six-Months Ended June 30, 2010 and 2009

The following summary table presents financial data for each of our operating segments (in thousands):


	Six-Months Ended
	June 30,
	2010			2009
	(In thousands)
Net revenue:
Radio	$	58,903			57,365
Television		7,780			7,481

Consolidated	$	66,683			64,846


Engineering and programming expenses:
Radio	$	11,474			14,495
Television		8,391			7,744

Consolidated	$	19,865			22,239


Selling, general and administrative expenses:
Radio	$	19,955			19,455
Television		3,666			4,370

Consolidated	$	23,621			23,825


Corporate expenses:	$	4,475			5,173

Depreciation and amortization:
Radio	$	1,386			1,593
Television		1,126			1,090
Corporate		490			480

Consolidated	$	3,002			3,163


Loss (gain) on the disposal of assets, net:
Radio	$	—			(20	)
Television		8			19
Corporate		—			(14	)

Consolidated	$	8			(15	)


Impairment of assets and restructuring costs:
Radio	$	—			10,614
Television		—			24
Corporate		—			48

Consolidated	$	—			10,686


Operating (loss) income:
Radio	$	26,088			11,228
Television		(5,411	)		(5,766	)
Corporate		(4,965	)		(5,687	)

Consolidated	$	15,712			(225	)

The following summary table presents a comparison of our results of operations for the six-months ended June 30, 2010 and 2009. Various fluctuations in the table are discussed below. This section should be read in conjunction with our unaudited condensed consolidated financial statements and notes.


	Six-Months Ended
	June 30,
	2010			2009
	(In thousands)
Net revenue	$	66,683			64,846
Engineering and programming expenses		19,865			22,239
Selling, general and administrative expenses		23,621			23,825
Corporate expenses		4,475			5,173
Depreciation and amortization		3,002			3,163
Loss (gain) on disposal of assets, net of disposal costs		8			(15	)
Impairment of assets and restructuring costs		—			10,686

Operating income (loss)	$	15,712			(225	)
Interest expense, net		(9,426	)		(13,118	)
Change in fair value of derivative instrument		5,863			2,490
Other income, net		—			1
Income tax expense (benefit)		3,546			(365	)

Net income (loss)	$	8,603			(10,487	)

Net Revenue

The increase in our consolidated net revenue of $1.8 million or 3% was due to increases in both our radio and television segment net revenues. Our radio segment net revenue increased $1.5 million or 3%, primarily due to special events and local sales, offset by a decrease in national sales. The increase in special events occurred in our Puerto Rico and Los Angeles markets and the increase in local sales occurred in all of our markets, with the exception of our Chicago and San Francisco markets. The decrease in national sales occurred in all of our markets, with the exception of our San Francisco market. Our television segment net revenue increased $0.3 million or 4%, primarily due to an increase in local spot sales and integrated sales, offset by a decrease in paid programming.

Engineering and Programming Expenses

The decrease in our consolidated engineering and programming expenses of $2.4 million or 11% was due to the decrease in our radio segment expenses. Our radio segment expenses decreased $3.0 million or 21%, primarily related to decreases in compensation and benefits for technical and programming personnel due to headcount reductions and music license fees. Our television segment expenses increased $0.6 million or 8%, primarily due to an increase in broadcasting rights fees for our new Puerto Rico, New York and Chicago outlets, offset by a decrease in acquired and original produced programming content.

Selling, General and Administrative Expenses

The decrease in our consolidated selling, general and administrative expenses of $0.2 million or 1% was due to the decrease in our television segment expenses. Our television segment expenses decreased $0.7 million or 16%, primarily due to a decrease in barter expenses, facilities expenses, professional fees and compensation and benefits for our selling, general and administrative personnel resulting from headcount reductions. Our radio segment expenses increased $0.5 million or 3%, primarily due to increases in special event expenses and the allowance for doubtful accounts.

Corporate Expenses

The decrease in corporate expenses was primarily a result of decreases in compensation and benefits for our corporate personnel due to headcount reductions, professional fees and insurance.

Operating Income (Loss)

The increase in operating income was mainly due to the increase in our net revenue and our decreases in operating expenses and impairment of assets and restructuring costs of $10.7 million.

Interest Expense, Net

Change in Fair Value of Derivative Instrument

In September and October 2008, the counterparty to an interest rate swap, Lehman Brothers Special Financing Inc., and its parent and credit support provider, Lehman Brothers Holdings Inc., each filed for bankruptcy. Based on these bankruptcy filings, this cash flow hedge was deemed ineffective and no longer qualified for hedge accounting. Therefore, the change in fair value from September 2008 to June 2010 was recorded in earnings as a “Change in fair value of derivative instrument.” For the six-month periods ended June 30, 2010 and 2009, the change in the fair value of derivative instrument totaled $5.9 million and $2.5 million, respectively.

Income Taxes

The income tax expense of $3.5 million arose primarily from the income tax expense resulting from the tax amortization of our FCC broadcasting licenses.

Net Income (Loss)

The increase in net income was primarily due to the increase in operating income related primarily to the increase in net revenue and the decreases in operating expenses and the impairment of assets and restructuring costs.

Liquidity and Capital Resources

Our primary sources of liquidity are cash and cash equivalents ($44.6 million as of June 30, 2010) and cash expected to be provided by operations. Our cash flow from operations is subject to such factors as overall advertising demand, shifts in population, station listenership and viewership, demographics, audience tastes and fluctuations in preferred advertising media. Our ability to raise funds by increasing our indebtedness is limited by the terms of the certificates of designation governing our Series B preferred stock and the credit agreement governing our senior secured credit facility. Additionally, our certificates of designation and credit agreement each place restrictions on us with respect to the sale of assets, liens, investments, dividends, debt repayments, capital expenditures, transactions with affiliates, and consolidations and mergers, among other things.

Our strategy is to primarily utilize cash flows from operations to meet our capital needs and contractual obligations. Management continually projects anticipated cash requirements and believes that cash from operating activities, together with cash on hand, should be sufficient to permit us to meet our operating obligations in the foreseeable future, including, among other things, required quarterly interest and principal payments pursuant to the credit agreement governing our senior secured credit facility term loan due 2012, and capital expenditures, excluding the acquisitions of FCC broadcasting licenses. While not significant to us to date, the disruptions in the capital and credit markets may result in increased borrowing costs associated with our short-term and long-term debt. Assumptions (none of which can be assured) which underlie management’s beliefs, include the following:

	•		the demand for advertising within the broadcasting industry and economic conditions in general will not deteriorate further in any material respect;

	•		we will continue to successfully implement our business strategy; and

	•		we will not incur any material unforeseen liabilities, including but not limited to taxes, environmental liabilities, regulatory matters and legal judgments.

As a result of the decrease in the demand for advertising and the deterioration of the economy, we began to implement a restructuring plan in the third quarter of fiscal year 2008 to reduce expenses throughout the Company. We incurred expenses related to the termination of various programming contracts and personnel and a loss on a sublease of office space. As of June 30, 2010, the total accrued expenses on our consolidated balance sheet related to restructuring activities were $0.4 million, which was included in other liabilities.

We evaluate strategic media acquisitions and/or dispositions and strive to expand our media content through distribution and affiliations in order to achieve a significant presence with clusters of stations in the top U.S. Hispanic markets. We engage in discussions regarding potential acquisitions and/or dispositions and expansion of our content through media outlets from time to time in the ordinary course of business. We anticipate that any future acquisitions would be financed through funds generated from permitted debt financing, equity financing, operations, asset sales or a combination of these or other available sources. However, there can be no assurance that financing from any of these sources, if necessary and available, can be obtained on favorable terms for future acquisitions.

The following summary table presents a comparison of our capital resources for the six-months ended June 30, 2010 and 2009, with respect to certain of our key measures affecting our liquidity. The changes set forth in the table are discussed below. This section should be read in conjunction with the unaudited condensed consolidated financial statements and notes.


	Six-Months Ended
	June 30,						Change
	2010			2009			$
	(In thousands)
Capital expenditures:
Radio	$	401			394			7
Television		310			124			186
Corporate		96			29			67

Consolidated	$	807			547			260


Net cash flows provided by operating activities	$	11,206			11,346			(140	)
Net cash flows used in investing activities		(807	)		(335	)		(472	)
Net cash flows used in financing activities		(19,331	)		(6,807	)		(12,524	)

Net (decrease) increase in cash and cash equivalents	$	(8,932	)		4,204

Net Cash Flows Provided by Operating Activities

Changes in our net cash flows from operating activities were primarily a result of the increase in sales, offset by an increase in cash paid to vendors, including interest.

Net Cash Flows Used in Investing Activities

Changes in our net cash flows from investing activities were a result of the increase in our capital expenditures.

Net Cash Flows Used in Financing Activities

Changes in our net cash flows from financing activities were primarily a result of the $15.0 million repayment of the Senior Credit Facility Revolver, offset by a decrease of $2.5 million related to cash dividends not declared or paid on our Series B preferred stock which was due on January 15, 2010.

Recent Developments

NASDAQ Audit Committee Compliance Letter

Our Board elected Mr. Manuel E. Machado as a director effective June 3, 2010. We notified NASDAQ on June 4, 2010 that our Board determined that Mr. Machado is qualified to serve on the Audit Committee of our Board under the requirements set forth in the NASDAQ Listing Rule 5605(c)(2) (the “Rule”), and that our Board appointed him to serve on the Audit Committee. As a result, on June 7, 2010, we received a letter from NASDAQ stating that we regained compliance with the Rule, which requires each listed company to maintain an audit committee composed of at least three members who meet certain eligibility criteria.

Dividend Payment on the Series B Preferred Stock

Under the terms of our Series B preferred stock, the holders of the outstanding shares of the Series B preferred stock are entitled to receive, when, as and if declared by the Board, dividends on the Series B preferred stock at a rate of 10 ³ / 4 % per year, of the $1,000 liquidation preference per share, payable quarterly.

In determining whether to declare and pay any prior or future cash dividends, our Board will consider management’s recommendation, our financial condition, as well as whether, under Delaware law, sufficient surplus or net profits exist to pay such dividends.

During the fiscal years 2010 and 2009, our Board, under management’s recommendation, determined that based on the circumstances at the time, among other things, the then current economic environment and future cash requirements, it was not prudent to declare or pay the July 15, 2010, January 15, 2010, October 15, 2009 and July 15, 2009 cash dividends in the aggregate amount of approximately $9.9 million.

Lehman Hedge Settlement

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources.

Item 4. Controls and Procedures

Evaluation Of Disclosure Controls And Procedures. Our management, including our principal executive and financial officers, have conducted an evaluation of the effectiveness of the design and operation of our “disclosure controls and procedures,” as such term is defined under Rules 13a-15(e) and 15d-15(e) of the Exchange Act, to ensure that information we are required to disclose in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and include controls and procedures designed to ensure that information we are required to disclose in such reports is accumulated and communicated to management, including our principal executive and financial officers, as appropriate, to allow timely decisions regarding required disclosure. Based on that evaluation, our principal executive and financial officers concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

Changes In Internal Control Over Financial Reporting. There has been no change in our internal control over financial reporting during the fiscal quarter ended June 30, 2010 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

The information set forth under Note 7 contained in the “Notes to Unaudited Condensed Consolidated Financial Statements” of this Quarterly Report on Form 10-Q is incorporated by reference in answer to this Item.

Item 1A. Risk Factors

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2009, which could materially affect our business, financial condition or future results. Other than the modification to the risk factor set forth below, there have been no material changes from the risk factors described in our Annual Report on Form 10-K for the year ended December 31, 2009. The below risk factor and risk factors described in our Annual Report on Form 10-K for the year ended December 31, 2009 are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results.

The liquidity of our common stock could be adversely affected if we are delisted from the NASDAQ Global Market.

While we believe that we currently meet all the listing requirements of the NASDAQ Stock Market, or NASDAQ, there can be no assurance that we will be able to maintain the listing of our common stock on the NASDAQ Global Market in the future.

Delisting from NASDAQ would make trading our common stock more difficult for investors, potentially leading to further declines in our share price. Without a NASDAQ listing, stockholders may have a difficult time getting a quote for the sale or purchase of our stock, the sale or purchase of our stock would likely be made more difficult and the trading volume and liquidity of our stock would likely decline. Delisting from NASDAQ would also result in negative publicity and would also make it more difficult for us to raise additional capital. The absence of such a listing may adversely affect the acceptance of our common stock as currency or the value accorded it by other parties. Further, if we are delisted, we would also incur additional costs under state blue sky laws in connection with any sales of our securities. These requirements could severely limit the market liquidity of our common stock and the ability of our stockholders to sell our common stock in the secondary market.

If our common stock is delisted by NASDAQ, our common stock may be eligible to trade on the OTC Bulletin Board, an over-the-counter quotation system, or on the pink sheets where an investor may find it more difficult to dispose of or obtain accurate quotations as to the market value of our common stock. We cannot assure you that our common stock, if delisted from the NASDAQ Global Market, will be listed on a national securities exchange, a national quotation service, the OTC Bulletin Board or the pink sheets.

Item 6. Exhibits

(a) Exhibits

The following exhibits, which are numbered in accordance with Item 601 of Regulation S-K, are filed herewith or, as noted, incorporated by reference herein:


Exhibit
Number		Exhibit Description

10.1*		Stock Option Agreement dated as of June 3, 2010 between the Company and Manuel E. Machado.

31.1*		Chief Executive Officer’s Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*		Chief Financial Officer’s Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**		Chief Executive Officer’s Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2**		Chief Financial Officer’s Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


* Filed herewith

** Furnished herewith

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	SPANISH BROADCASTING SYSTEM, INC.
	By:	/s/ JOSEPH A. GARCÍA
		JOSEPH A. GARCÍA
		Chief Financial Officer, Chief Administrative Officer, Senior Executive Vice President and Secretary (principal financial and accounting officer and duly authorized officer of the registrant)

Date: August 13, 2010

EXHIBIT INDEX


Exhibit
Number		Exhibit Description

10.1*		Stock Option Agreement dated as of June 3, 2010 between the Company and Manuel E. Machado.

31.1*		Chief Executive Officer’s Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*		Chief Financial Officer’s Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**		Chief Executive Officer’s Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2**		Chief Financial Officer’s Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


* Filed herewith

** Furnished herewith

EXHIBIT 10.1

SPANISH BROADCASTING SYSTEM, INC.

2006 OMNIBUS EQUITY COMPENSATION PLAN

STOCK OPTION GRANT AGREEMENT FOR NON-EMPLOYEE DIRECTORS

This STOCK OPTION GRANT AGREEMENT, dated as of the date set forth on Schedule A (the “ Date of Grant ”), is delivered by Spanish Broadcasting System, Inc. (the “ Company ” or “ SBS ”), to you (the “ Grantee ”). Capitalized terms used herein but not defined herein have the meanings given to them in the Spanish Broadcasting System, Inc. 2006 Omnibus Equity Compensation Plan.

RECITALS

A. The Spanish Broadcasting System, Inc. 2006 Omnibus Equity Compensation Plan (the “ Plan ”) attached hereto as Exhibit A provides for the grant of stock options to purchase shares of Class A common stock, $0.0001 par value per share, of the Company (the “ Common Stock ”).

B. The Board of Directors of the Company (the “ Committee ” for purposes of grants to Non-Employee Directors) has decided to make a stock option grant, subject to the terms and conditions set forth in this Stock Option Grant Agreement (the “ Agreement ”) and the Plan, as an inducement for the Participant to promote the best interests of the Company and its shareholders.

NOW, THEREFORE, the parties to this Agreement, intending to be legally bound hereby, agree as follows:

1. Grant of Option . Subject to the terms and conditions set forth in this Agreement and in the Plan, the Company hereby grants to the Grantee a Non-Qualified Stock Option (the “ Option ”) to purchase the shares of common stock of the Company (“ Shares ”) at a specified exercise price per Share set forth on Schedule A . The Option shall become exercisable according to Section 2 below.

2. Exercisability of Options . Options shall become exercisable (vest) in such installments (which need not be equal) and at such times as set forth on Schedule A , if the Grantee is employed by, or providing service to, the Employer on the applicable date. To the extent not exercised, installments shall accumulate and may be exercised, in whole or in part, at any time after becoming exercisable, but not later than the date the Option expires. The Committee may accelerate the exercisability of any or all-outstanding Options at any time for any reason. Notwithstanding the foregoing, any Options that are not exercisable prior to a Change in Control shall become exercisable on the date of such Change in Control and shall remain exercisable for the remainder of their term.

3. Term of Options . Options shall be for such term as the Committee shall determine as set forth on Schedule A , provided that no Option shall be exercisable after the expiration of ten years from the Date of Grant, unless it is terminated at an earlier date pursuant to the provisions of this Agreement or the Plan.

4. Exercise of Option After Termination of Service as Non-Employee Director . To the extent exercisable the Option granted under this Agreement may be exercised by the Grantee only while he is providing service to the Company as a Non-Employee Director, except as provided below:

(i) If the Grantee’s dies while a Non-Employee Director, or if his service as a Non-Employee Director is terminated due to his Disability, the Grantee (or his Designated Beneficiary or personal representative, as applicable) may exercise the Option no later than twelve (12) months after such death or determination of Disability;

(ii) If the Grantee’s service as Non-Employee Director terminates for any reason other than those set forth in (i) above and is not for Cause, the Grantee may exercise the Option within three (3) months after such termination; or

(iii) If the Grantee dies during an extended exercise period described in (i) or (ii) above, his Designated Beneficiary may exercise such Option no later than the expiration of such extended period.

Notwithstanding (i) through (iii) above or anything in this Agreement or the Plan to the contrary, at any time after the grant of the Option, the Committee, in its sole and absolute discretion and subject to whatever terms and conditions it selects, may provide that the Option may be exercised after the relevant extended period set forth above, but in no event later than the date that it would have expired under this Agreement.

5. Exercise Procedures .

(a) Subject to the provisions of Sections 2 and 3 above, the Grantee may exercise part or all of the exercisable Option by giving the Company written notice (in person or by first class mail to the Secretary of the Company at the Company’s principal executive office) of the Grantee’s intent to exercise the Option in the manner provided in this Agreement, specifying the number of Shares as to which the Option is to be exercised and is accompanied by full payment therefor. The purchase price for any Shares purchased pursuant to the exercise of an Option shall be paid in full upon such exercise in cash, by check or, at the discretion of the Committee and upon such terms and conditions as the Committee shall approve, by transferring previously owned Shares to the Company, having Shares withheld or exercising pursuant to a “cashless exercise” procedure, or any combination thereof. Any Shares transferred to the Company as payment of the purchase price under an Option shall be valued at their Fair Market Value on the date of exercise of such Option. If requested by the Committee, the Grantee shall deliver the Option Agreement evidencing the Option to the Secretary of the Company who shall endorse thereon a notation of such exercise and return such Option Agreement to the Grantee. Not less than one hundred (100) Shares may be purchased at any time upon the exercise of an Option unless the number of Shares so purchased constitutes the total number of Shares then purchasable under the Option or the Committee determines otherwise, in its sole discretion. The Committee may impose from time to time such limitations as it deems appropriate on the use of Shares of the Company to exercise the Option.

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(b) The obligation of the Company to deliver Shares upon exercise of the Option shall be subject to all applicable laws, rules, and regulations and such approvals by governmental agencies as may be deemed appropriate by the Committee, including such actions as Company counsel shall deem necessary or appropriate to comply with relevant securities laws and regulations.

(c) All obligations of the Company under this Agreement shall be subject to the rights of the Company as set forth in the Plan to withhold amounts required to be withheld for any taxes, if applicable.

6. Change of Control . The provisions of the Plan applicable to a Change in Control shall apply to the Option, and, in the event of a Change in Control, the Option shall automatically become fully exercisable.

7. Restrictions on Exercise . Except as the Committee may otherwise permit pursuant to the Plan, only the Grantee may exercise the vested portion of the Option during the Grantee’s lifetime and, after the Grantee’s death, the Option shall be exercisable (subject to the limitations specified in the Plan) solely by the legal representatives of the Grantee, or by the person who acquires the right to exercise the Option by will or by the laws of descent and distribution, to the extent that the Option is exercisable pursuant to this Agreement.

8. Grant Subject to Plan Provisions . This grant is made pursuant to the Plan, the terms of which are incorporated herein by reference, and in all respects shall be interpreted in accordance with the Plan. The grant and exercise of the Option are subject to interpretations, regulations and determinations concerning the Plan established from time to time by the Committee in accordance with the provisions of the Plan, including, but not limited to, provisions pertaining to (i) rights and obligations with respect to withholding taxes, (ii) the registration, qualification or listing of the Shares, (iii) changes in capitalization of the Company and (iv) other requirements of applicable law. The Committee shall have the authority to interpret and construe the Option pursuant to the terms of the Plan, and its decisions shall be conclusive as to any questions arising hereunder.

9. No Other Rights . The grant of the Option shall not confer upon the Grantee any right to be retained by or in the service of the Company.

10. No Shareholder Rights . Neither the Grantee, nor any person entitled to exercise the Grantee’s rights in the event of the Grantee’s death, shall have any of the rights and privileges of a shareholder with respect to the Shares subject to the Option, until certificates for Shares have been issued upon the exercise of the Option.

11. Assignment and Transfers . Except as the Committee may otherwise permit pursuant to the Plan, the rights and interests of the Grantee under this Agreement may not be pledged, sold, assigned, encumbered, hypothecated to or otherwise transferred in favor of any party other than the Company or a Subsidiary except, in the event of the death of the Grantee, by will or by the laws of descent and distribution. In the event of any attempt by the Grantee to alienate, assign, pledge, hypothecate, or otherwise dispose of the Option or any right hereunder, except as provided for in this Agreement, or in the event of the levy or any attachment, execution or similar process upon the rights or interests hereby conferred, the Company may terminate the Option by notice to the Grantee, and the Option and all rights hereunder shall thereupon become null and void. The rights and protections of the Company hereunder shall extend to any successors or assigns of the Company and to the Company’s parents, subsidiaries, and affiliates. This Agreement may be assigned by the Company without the Grantee’s consent.

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12. Tax Consequences and Withholding . The exercise of the Option will result in taxable income to the Grantee, and the Grantee (or the Grantee’s legal representative in the event of death) shall be solely responsible for all tax consequences that result from the exercise of the Option, as well as any subsequent sale of the Shares received upon exercise of the Option. The Grantee (or the Grantee’s legal representatives in the event of death) shall pay to the Company, or make other arrangements satisfactory to the Company to provide for the payment of, any federal, state, local or other taxes that the Company is required to withhold with respect to the exercise of the Option.

13. Applicable Law . The validity, construction, interpretation and effect of this instrument shall be governed by and construed by and determined in accordance with the laws of the State of New York, without giving effect to the conflicts of laws provisions thereof.

14. Notice . Any notice to the Company provided for in this instrument shall be addressed to the Company in care of the Chief Financial Officer (or his designee), at 2601 S. Bayshore Drive, PH II, Coconut Grove, Florida 33133 and any notice to the Grantee shall be addressed to such Grantee at the current address shown on the payroll of the Employer, or to such other address as the Grantee may designate to the Employer in writing. Any notice shall be delivered by hand, sent by telecopy or enclosed in a properly sealed envelope addressed as stated above, registered and deposited, postage prepaid, in a post office regularly maintained by the United States Postal Service.

15. Definitions .

Whenever used in this Agreement, the following terms and phrases have the following respective meanings:

“ Cause ” shall mean the Grantee’s willful failure to perform his duties with the Company or a Subsidiary or the willful engaging in conduct which is injurious to the Company or a Subsidiary, monetarily or otherwise, as determined by the Committee in its sole discretion.

“ Designated Beneficiary ” shall mean any individual designated by the Grantee, in a manner determined by the Committee, to receive amounts due the Grantee in the event of the Grantee’s death. In the absence of an effective designation by the Grantee, Designated Beneficiary shall mean the Grantee’s estate.

[Remainder of page intentionally left blank]

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IN WITNESS WHEREOF, the Company has caused its duly authorized officers to execute and attest this Agreement, and the Grantee has executed this Agreement, effective as of the Date of Grant.


SPANISH BROADCASTING SYSTEM, INC.
By:	/s/ Raul Alarcon, Jr.
	Name:	Raul Alarcon, Jr.
	Title:	President

I hereby accept the Option described in this Agreement, and I agree to be bound by the terms of the Plan and this Agreement. I hereby further agree that all the decisions and determinations of the Compensation Committee shall be final and binding.



	Grantee:	/s/ Manuel E. Machado

	Address:

	Date:	July 19, 2010

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SCHEDULE A

SPANISH BROADCASTING SYSTEM, INC.
2006 EQUITY COMPENSATION PLAN
NONQUALIFIED STOCK OPTION GRANT FOR NON-EMPLOYEE DIRECTOR

The Board of Directors of Spanish Broadcasting System, Inc. (the “Company”) has determined to grant to you (the “Grantee”) a nonqualified stock option to purchase shares of common stock of the Company under the Spanish Broadcasting System, Inc. 2006 Omnibus Equity Compensation Plan (the “Plan”). The terms of the grant are set forth in the Nonqualified Stock Option Grant Agreement (the “Grant”) provided to you. The following provides a summary of the key terms of the Grant; however, you should read the entire Grant, along with the terms of the Plan, to understand the Grant fully.


Grantee:		Manuel E. Machado
Date of Grant:		June 3, 2010
Options Granted:		50,000
Option Price per share:		$1.79
Total Cost to Exercise:		$89,500
Exercisability Schedule*:		20% immediately, 20% each year after
		10,000 on 6/3/2010
		10,000 on 6/3/2011
		10,000 on 6/3/2012
		10,000 on 6/3/2013
		10,000 on 6/3/2014
Term/Expiration Date:		June 3, 2020 unless terminated earlier.
Transferability:		Not transferable except in accordance with the Plan.

*- The Grantee must be providing services to the Company as a Non-Employee Director (as defined in the Plan) on the applicable date for the option to become exercisable.

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Exhibit 31.1

CERTIFICATION

I, Raúl Alarcón, Jr., certify that:

1. I have reviewed this quarterly report on Form 10-Q of Spanish Broadcasting System, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



	/s/ RAÚL ALARCÓN, JR.
	Name:	Raúl Alarcón, Jr.
	Title:	Chairman of the Board of Directors, Chief Executive Officer and President

Date: August 13, 2010

Exhibit 31.2

CERTIFICATION

I, Joseph A. García, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Spanish Broadcasting System, Inc.;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


	/s/ JOSEPH A. GARCÍA
	Name:	Joseph A. García
	Title:	Chief Financial Officer, Chief Administrative Officer, Senior Executive Vice President and Secretary

Date: August 13, 2010

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Spanish Broadcasting System, Inc. (the “Company”) for the quarterly period ended June 30, 2010, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Raúl Alarcón, Jr., Chairman of the Board of Directors, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

	(1)		The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

	(2)		The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



	/s/ RAÚL ALARCÓN, JR.
	Name:	Raúl Alarcón, Jr.
	Title:	Chairman of the Board of Directors, President and Chief Executive Officer

Date: August 13, 2010

Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Spanish Broadcasting System, Inc. (the “Company”) for the quarterly period ended June 30, 2010, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Joseph A. García, Chief Financial Officer, Executive Vice President and Secretary of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

	(1)		The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

	(2)		The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



	/s/ JOSEPH A. GARCÍA
	Name:	Joseph A. García
	Title:	Chief Financial Officer, Chief Administrative Officer, Senior Executive Vice President and Secretary

Date: August 13, 2010

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